TPP agreement could have negative impact on U.S. wheat

A trade agreement between 11 countries could have a negative effect on United States’ wheat exports to Japan in the future.

On Jan. 23 in Tokyo, Japan, the 11 in the Trans-Pacific Partnership (TPP) announced they had reached a deal on the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

The announcement came nearly one year after President Donald Trump withdrew the United States from the partnership.

The trade agreenebt, which is expected to be signed in March, would allow Canada and Australia to gradually lower tariffs on wheat exports to Japan by about $65 per ton over the next several years. Tariffs on wheat imports from the U.S. would remain at the same price.

Both Australia and Canada are among the participating countries in the TPP and competitors of the U.S. in the Japanese market in wheat exports.

In a news release, Washington Grain Commission CEO Glen Squires expressed his displeasure at the political meddling, which he said will disturb a 60-70 year market relationship between Japan and the U.S.

Squires said the Japanese market is one of the commission’s most important markets and he is heartbroken at the possibility of the relationship with Japan “will fall victim to political whims.”

Squires and other Pacific Northwest representatives and U.S. wheat executives were in Japan meeting with government officials when the news of TPP talks were concluding.

He said the Japanese government is not celebrating cheaper imports of wheat, nor do they want to find replacements for U.S. wheat, which their consumers depend on for making high quality products.

“Japan loves our wheat,” Squires added. “They don’t want to go somewhere else to get it, but at some point price will overcome quality.”

The TPP’s agreement is open for other countries to join in the future, and Squires said Japan wants the U.S. back in the partnership. He noted the Japanese government is not interested in a bi-lateral trade agreement with the U.S.

“The PNW helped develop the Japanese milling industry and they feel we are owed a debt of gratitude,” Squires said. “But I’m afraid gratitude won’t make up for a $65 a ton price disadvantage.”

The release noted in 2016, Japan imported $1.4 billion worth of wheat, with 45 percent of it coming from the U.S. Japan was the No. 2 market for soft white and the No. 1 market for club wheat grown in the Pacific Northwest, importing 784,000 metric tons.

Squires said if there is a silver lining for Eastern Washington, it is that 80 percent of the wheat grown in the region is in these two specialty classes which do not have obvious replacements.

After the TPP is signed, a free trade agreement between Japan and the European Union is expected to be signed, which would more competition for the U.S. wheat.

In the release, Ben Connor, U.S. Wheat Associates Director of Policy, said the agreement sends another discouraging signal to wheat importing customers in Japan.

“As the agricultural community warned when the President made the announcement, withdrawing from TPP was shortsighted and unnecessary, and now U.S. wheat farmers could take the hit,” Connor added.

Grain and wheat commissions are currently engaging state and federal officials about the agreement how it will affect the U.S.

Squires said the Grain Commission is speaking with legislators, representatives and senators in Eastern Washington who understand about trade issues.

Washington Association of Wheat Growers Executive Director Michelle Hennings said she is scheduled to meet with the White House and congressional delegation on Feb. 6 to explain how losing market shares will be detrimental to farmers and the U.S.

U.S. Wheat Associates Spokesman Steve Mercer said the group is focused on telling as many people as they can. He added the U.S. Wheat Associates is working with customers in Japan about the matter.

Mercer said local farmers can contact their local wheat growers commissions and associations for additional information.